A group of banks that advise the Federal Reserve have complained about the bank's asset purchase program, saying it has "created systemic financial risks and potential structural problems" for other financial institutions. The bankers questioned whether the bond-buying program was best to boost growth and unemployment.

WASHINGTON (MarketWatch) — A group of banks that advise the Federal Reserve has complained about the central bank’s asset purchase program, saying it has “created systemic financial risks and potential structural problems” for financial institutions.

“The Fed’s aggressive purchases of 15-year and 30-year MBS have depressed yields for the ‘bread and butter’ investment in most bank portfolios; banks seeking additional yield have had to turn to investment options with longer durations, lower liquidity, and/or higher credit risk,” the bankers told the Fed, according to the minutes of the meeting, released by the Fed on Friday.

The Fed meets every quarter with the Federal Advisory Council, which is composed of one top banker from each of the 12 Fed districts. Members include Morgan Stanley MS +1.05% CEO James Gorman, State Street STT -0.61% CEO Joe Hooley and BB&T BBT -1.09% CEO Kelly King.

Bloomberg had obtained the minutes of the last Federal Advisory Council in February through a Freedom of Information Act request, prompting the central bank to decide to release the minutes of future meetings. The last meeting was on May 17.

The Fed and the bankers discussed a wide range of topics, including GSE reform, the Fed’s stress tests and current market conditions.

The bankers seemed lukewarm at best about the Fed’s $85 billion-per-month asset purchase program, saying it provided some support for a slow recovery but wondered whether it was the right policy to boost growth and employment.

“While some believe monetary policy may not be accommodative enough in light of current government fiscal policy, others believe that constant injections of new reserves have not returned the economy to the vibrant upbeat model it used to be and that current monetary policy is ineffective,” the minutes show.

The bankers were also concerned about the Fed’s exit strategy, noting that unwinding the easy policy stance may be painful for consumers and businesses.

And after buying so many mortgage-backed securities over the past five years, the Fed “may now be perceived as integral to the housing finance system.”